Answer:
Market rate of interest was less than the face rate at the time of issue
Step-by-step explanation:
Bonds represent debt instruments whereby the borrower raises long term finance agreeing to pay the lender a fixed amount of coupon payments periodically as well as principal repayment upon redemption.
The market rate of interest or yield to maturity of a bond represents the expectation of bond holders as it is the rate of return earned on similarly priced bonds by the investors in the market.
In case the issuer issues bonds wherein the coupon rate of payment is greater than the market rate of interest, such bonds are referred to as bonds priced at a premium. Since yield to maturity rate is inversely related to bond price. Higher the yield to maturity, lower would be the price of bonds and vice versa.